How can I raise funds with little to no upfront costs?
If your goal is to limit upfront costs and launch as quickly as possible, then launching without a two year independent CPA review is an option to consider.
As the rule states, any offering that posts a maximum funding goal of $107,000 or less only needs to provide financial information from its tax returns (but not the tax returns themselves) certified by the principal executive officer. Consequently, the time it takes to produce this report can be done in a day and the cost is $0.
If choosing this option, it is vital to also disclose that the company will be performing rolling closes throughout the campaign. You may also want to set an easily obtainable minimum funding goal so that the company can decide to close on funds once the minimum target amount is surpassed.
Start the raise with a $107,000 maximum raise.
If you start with a low maximum raise of under $107,000, you do not need to hire a CPA to review your last two year or recent fiscal year financials. Your company's CEO just needs to sign off on the financials. You can save these costs for later if your campaign raises more than $107,000 in investments.
- Set a low minimum for your first raise.
We automatically set your minimum funding goal at $10,000 because you can begin to withdraw funds once you meet your minimum raise. Therefore, if you set a $10,000 minimum raise, you can "partially close" on the first $10,000 once it's raised. More importantly, you can immediately use the $10K capital to continue to market the rest of your raise. You just need to specify in the Form C that you will be making multiple closings. You also need to specify your intentions in your "Use of Proceeds" so investors know you're using capital to raise the rest of your capital. This is not unusual but it must be disclosed.
- Use your phone to make your campaign video!
An effective video can be shot on your iPhone, edited on your own laptop, and uploaded to YouTube. Most investors aren't as interested in how much money you pay an ad agency to create a video. Most investors are interested in your passion and the potential of your product/service.
- Build your own campaign page using StartEngine's Story Editor.
If you can update your company's Facebook page on your own, you should be able to do the same with your crowdfunding campaign. StartEngine realized this last year, and we decided to create a user-friendly campaign page editor so you can upload photos, videos, and text in a unified fashion. Additionally, our new campaign template provides recommendations about which content to include on the page.
- Buy ads in waves to raise capital steadily.
With a low minimum and multiple closings, a company can start to raise capital with $0K to $1K in out-of-pocket costs. The key is to think smart about marketing the campaign. Know which audiences will cost the least amount of money to reach initially, and then spend more as your campaign grows. For example, once you have upward of $20,000 invested, you could start making ad-buys with Facebook. You can learn more about marketing strategy by going to the Marketing section of our help center.
- Increase your maximum raise to $1,070,000.
If your campaign has traction, you will be able to file an amendment to your campaign to increase your maximum raise. StartEngine does not charge to file amendments (if you are increasing your maximum to $1.07M). However, you will need to hire a CPA at this point, but with the time you spent raising your initial capital, your operating history is more substantial and your costs could be lower.
- Close your raise again to withdraw more funds.
You can close your raise and withdraw funds. You must give appropriate notice to your investors. However, with those withdrawn funds, you can continue to market your raise.